Occidental Petroleum CEO: Capital Spending May Come Down In Rest Of '12

Date : 04/26/2012 @ 1:03PM
Source : Dow Jones News
Stock : Occidental Petroleum Corp. (OXY)
Quote : 77.42  -0.21 (-0.27%) @ 4:32PM

Occidental Petroleum CEO: Capital Spending May Come Down In Rest Of '12

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Occidental Petroleum Corp. (OXY) could cut back on drilling for natural gas liquids if prices continue below historical levels, Chief Executive Steve Chazen said Thursday.

"If current NGL prices continue, cutting some liquid-rich wells may be necessary," Chazen said in an earnings call with investors.

Occidental natural gas liquids, or NGL, realizations are below historical levels versus crude oil, at $52.51 a barrel in the first quarter of 2012. Occidental's realized price for worldwide crude oil was $107.98 a barrel.

Occidental produced about 72,000 barrels per day of NGLs in the first quarter, out of a total production of 755,000 barrels a day of oil equivalent.

The Los Angeles-based company's capital expenditures nearly doubled to $2.4 billion in the first quarter from $1.3 billion in the same period last year, a figure that was higher than what analysts expected. Chazen said that the "current capital run rate may come down during the rest of the year," as projects are completed.

Occidental, the largest producer of oil and liquids in the lower-48 U.S. states, could execute some "small acquisitions" to put the cash it has accumulated to use, Chazen said, but he told investors to expect nothing "flashy."

"I really don't need to do anything material" unless a bargain comes by, he said.

Chazen said he expects domestic production in the second quarter to increase between 6,000 and 8,000 barrels a day from the first quarter average level of 455,000 barrels of oil per day.

Oil production in Colombia, which saw a 7,000 barrel per day drop due to insurgent activity in the first quarter, should return to normal in the second quarter, Chazen added.

--By Angel Gonzalez, Dow Jones Newswires; 713-547-9214; angel.gonzalez@dowjones.com

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